With the focus on the Fiscal Cliff here in the U.S. as we enter the last month of the year and hedge and equity fund managers struggle with subpar 2012 results no one is paying a great deal of attention to the EU. Certainly there has been news as individual countries try to extract their way out of excess debt and at the same time spur growth, but what about the EU over all? There are 17 countries in the euro zone block and they have very different outlooks. As a block they have been contracting, falling into a recession last year. Is it ending or will it continue?

A report out this week shows a clear slowdown of the contraction. By no means is this a signal that the end of their recession is over but it is the first sign that maybe the recession has bottomed out. The PMI composite rose last month from 45.7 to 46.5 which was much higher than the preliminary number for that report suggested. Although still below 50, the demarcation from shrinkage to growth is a step in the right direction.

Strong data from Germany and Ireland lead the optimism. Now it remains to be seen if a trend develops. The southern countries continue to be the drag and with an EU unemployment rate of 12%, major hurdles remain.

Still it is the first hopeful sign after many of the EU biggest countries sharply reduced debt. One reason for their current recession was debt reduction, a necessary effort to prevent a deeper crisis and yes a deeper crisis could easily develop if they didn’t address their debt. Maybe the U.S. should learn something from their counter parts across the pond.